Neo-liberal Critique of the Welfare State Essay

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21 August 2016

Neo-liberal Critique of the Welfare State

The welfare state refers to the initiative of the government in a country to take care of the wellbeing of the public. Under the welfare state, the government undertakes the responsibility of protecting and promoting the economic and social welfare of its people (Kuhnle 2000). The welfare state is based on the equality of all. In a welfare state, the government is involved in the lives of its people on all levels. The burden of providing for the physical and social needs of the people is almost fully placed on the government.

The main objective of the welfare state is the creation of economic equability and striving to improve the standards of living. The government ensures fair distribution of resources, provision of equal opportunities, and provision of public services to those who lack the means to acquire them. The government in this case takes the accountability for the wellbeing of its people (Gooden et al. 1999). Hypothetically, the responsibility is supposed to be inclusive given the fact that the welfare of the people is generally considered as a right. This is to say that citizens are entitled to the welfare state.

This can also be taken to refer to the establishment of “social safety net” (Rice, Goodin and Parpo 2006). Neoliberals have attacked the welfare state from different angles with some advocating for its complete abolishment and others claiming that it should be partially eradicated (Barrow 1998). They have given very many reasons as to why the welfare state should be reviewed and necessary measures taken. They have provided a number of reasons as to why the welfare state should be reconsidered. Neo-liberals are the advocates of economic liberalization as the means by which social progress can be achieved (Niggle 2006).

This paper evaluates the neo-liberal critique of the welfare state. The neo-liberals advocate for a free and liberal economy where every person is involved. It is from this perspective that the welfare state is criticized for failing to give the citizens a chance to participate in the liberal market economy (Rice, Goodin and Parpo 2006). It is argued that the welfare state makes people reliant on the government and thus fail to labor for their own needs. Most developed countries have established welfare states for providing for the needs of their people.

As a result, most people do not see the need to toil when their needs can be met freely. Nevertheless, there have been studies that have provided the claim that there is no connection between the economic performance and appending on welfare in the world economies. This means that there is no proof of the fact that the welfare state hinders social progress (Niggle 2006). When the progress of some of the developed countries that provide welfare is analyzed, it is clear that some of the countries that spend less on welfare are doing worse than those that spend more.

For example, the US performs worse than a country like Netherlands. This is despite the fact that the latter spends more on welfare state than the former. This therefore shows that the welfare state could contribute, but is not responsible for uneven social progress (Gooden et al. 1999). The opponents of the welfare state claim that it tends to put the burden of providing for the citizens on some people while others sit back and enjoy. This is supported by the fact that the welfare state is financed through the taxpayers’ money (Kuhnle 2000). This is from the people who are employed and working hard to earn an income.

Their income is taxed to provide for the people in the country who are not able to work through the welfare state. This can however be countered by the fact that there is a great income inequality in the society today. Inequality exists between executives and the average workers, between male workers and female workers and between people of different races. The welfare state is one way of ensuring that there is redistribution of resources and income for uniform development and also to take care of the marginalized groups in the society (Rice, Goodin and Parpo 2006).

There has been criticism on the welfare state based on the dispensations made by the capitalists. This is done in the efforts to redirect the working class away from the need to follow an entirely socialist society and economy. This is what has been evident in a country like Germany. Additionally, the socialist class is a strong believer in patching up the inefficient capitalist economy and revealing the loopholes in the capitalist economy. They believe that the welfare system will not be necessary where government and ownership of the means of production is implemented (Kuhnle 2000).

The critics also claim that the welfare state and the contemporary social democratic programs stifle the motivation of the market. This is so because of the provision of resources like unemployment insurance policies, minimum pay, profits on taxes, and reduction of the reserved labor. The result of this is that there is very little motivation to invest. Basically, the opponents claim that the welfare state demoralizes the capitalist economy and its incentive organization. There is no capitalist who will be motivated to invest his capital in order to feed the entire society (Itoh 1995).

Another criticism views the welfare state as stealing of the wealth of slavery. This is based on the classical liberal fundamental right to obtaining and property ownership. From this point of view, it is a fundamental right of every person to be in ownership of his own body and thus be allowed to enjoy the fruit of the labor of that body (Cook 2001). This is where the transfer of money from one person to another by the state in the name of the welfare state is considered stealing. It is also a form of forced labor where some people have to work hard only for the benefit of others.

Despite the fact that the welfare state is created by a democratically elected government, it infringes this fundamental right that every person is entitled to. This leads to less motivation to work, where one begins to view his or her labor as being for the benefit of others. The welfare state imposes what is referred to as Servile Law (Waarden and Lehmbruch 2003). This law shares the element of the ancient slavery. According to this law, positive law states that some individuals must toil for others, who in the same way must take care of them.

This is unfair because one group of the public works for one that does not work. The group that is fed from the sweat of others is mostly comprised of people who have intentionally refused to work (Mendes 2003). Some other critics argue that the welfare state tends to offer its benefactors with the same rate of income as the minimum payment (Gould 1993). This has encouraged more people to sit back and wait for the welfare. The dependants of the welfare state do not find the need to work for minimum wage where even without working they will receive the same amount.

This has led to the creation of a class of citizens that are fully dependant on the welfare state. This is despite the fact that the welfare is available only for the citizens who are not able to work. In the United Kingdom for example, the idea of the welfare state was aimed at poverty alleviation by offering certain individuals basic necessities (Niggle 2006). The state of affairs currently is that the welfare state has extended to provision of finances to a large number of individuals than the nation is able to afford. There is a feeling by some supporters that this argument is ideally untrue.

They argue that in the United Kingdom, the welfare system offers people very little finances compared to the minimum wage in the country. However, the dependants of the social welfare in this country have the feeling that they need to access more benefits from the government. If the government bends to these demands, it is evident that the country could be in a very huge financial trouble. People have become so dependant on the welfare state until they feel that it is their right to make demands (Cook 2001). Neo-liberals criticize the welfare state for leading to increase in taxes.

This criticism is logical because the finances for the welfare states come from taxes. Enough money has to be availed for the system to operate well and ensure that all the benefactors are covered. This can only be done through ensuring that enough money is obtained through taxation from those who are working. This leads to an increase in taxes. This is basically true from case studies like in Denmark, where the tax level went up to 48. 9 percent of the country’s GDP in the year 2007. Another similar case is Sweden where the tax level was as high as 48.

2 percent of the country’s GDP in the same year (Xu 2007). This however does not mean that there is a reduction in the income of the people in the countries in question. It is argued that this is so because the state taxes ideally return to the workers it is obtained from. This is from the fact that most of the money from tax is used in the provision of public amenities that are enjoyed by the same people who are the tax payers (Barr 2004). The opponents believe that the welfare benefits offered by the government are more costly and less effective than if the same were offered by the private sector.

This is in line with a liberal economy where the private sector is offered an important part to play in the economy. In the year 2000, Louis Kaplow and Steven Shafell produced two articles with the argument that any social program founded on the elements of equality and impartiality would lead to an economical system that is Pareto inefficient (Barr 2004). It is obvious that every commodity that is offered free of charge at the consumption point would obviously be highly demanded. There would be efficient allocation of resources if stipulation reflects the charges (Mendes 2003).

There have been arguments that the welfare system undermines the conventional family life. Dependence on welfare state encourages over-reliance on the government and increment of social evils. Single parenthood has been encouraged since people know that they will be taken care of by the state. It has been argued that the welfare state fails on moral, social and economic grounds. The welfare system has led many people to relax and wait for the free income. As a result, people have become reluctant to get education and employment.

This has led to the increase of social evils as a result. This shows that the welfare state does the society more evil than good (Cook 2001). Conclusion The welfare state was established with the needs of the people who are not able to work in mind. It is a fact that most of the criticisms against the welfare state are true. The welfare state has led to over reliance on the government, making people less inclined to work. It is also true that they have tended to discourage capital investment where people will work to benefit those who are not working.

The welfare state has also led to an increase in taxes, as more finances are needed to fund the welfare state. These are some of the neo-liberal criticisms of the welfare state. This does not mean that the welfare state should be completely abolished. As mentioned in the paper, there is great income disparity in the community today. This is not the fault of those who are unfortunate to have low income and those who are not able to access employment. There is dire need to redistribute resources and income in the society. There is no better way of doing this than taxation for provision through the welfare state.

The welfare state was also created for a noble objective that is, benefiting those who are unfortunate and marginalized in the society. This group is still in the society and abolishment of the welfare state will be a problem to them. It is however undeniable that something needs to be done to make this system more effective and efficient for economical development. One of the ways forward is to restrict the spending on the welfare state. This will be achieved through restructuring of the policy and reviewing the benefactors. Neo-liberal critics agree that there is need for minimum provision for those in need.

This means that the system cannot be entirely abolished, but there is need for serious changes on it. This way it will be able to meet its objectives to the society, while at the same time allowing for economical development. Studies need to be carried out to find the best way forward as far as the welfare state is concerned. Barr, N. 2004, Economics of the welfare state, Oxford University Press, New York. Barrow, C. 1998, State Theory and the Dependency Principle: An Institutionalist Critique of the Business Climate Concept, Journal of Economic Issues, Vol. 32. Cook, P.

2001, Discrediting Neo-Liberalism: The Social Democratic Welfare State Of The Netherlands. Available on May 12, 2010 from http://www. wlu. edu/documents/shepherd/academics/cap_01_cook. pdf Gooden, R. et al. 1999, The Real Worlds of Welfare Capitalism, Cambridge University Press, Cambridge Gould, A. 1993, Capitalist Welfare Systems, Longman, New York. Itoh, M. 1995, Political Economy for Socialism, St. Martin’s Press, New York. Kuhnle, S. 2000, Survival of the European Welfare State, Routledge, New York. Mendes, P. 2003, Australia’s Welfare Wars: the Players, the Politics and the Ideologies,